Market has got it wrong on Costa Fuego. It is not about the...

Market has got it wrong on Costa Fuego. It is not about the grades but the scale and low cost/capital intensity. A Q&A on Costa Fuegogrades and the potential impact of La Verde;

Low-grade but still viable

• A 0.4% Cu grade (4,000 ppm) is low compared to traditional copper mines, but it’s within the range of grades currently mined economically, especially with modern bulk mining and leaching techniques (e.g., heap leaching, SX-EW).
• Chile has some major operations with similar or even lower average grades — like Escondida, where parts of the deposit have grades near 0.3%. Escondida is the largest copper mine in the world
  

Favourable location: Chile

Chile is the world’s largest copper producerwith:

• • Established legal and regulatory frameworks
  • Mining-friendly policies
  • Extensive expertise and labour availability
• Being at low altitude helps reduce operational costs. Many of Chile’s large mines are at high altitudes, where logistics, energy, and labor costs are higher.

Economic viability depends on cost structure andcopper prices

• At copper prices around $3.50–$4.00/lb, a 0.3% deposit can be profitable if the all-in sustaining cost (AISC) is low enough
• Heap leach operations can process low-grade ore at costs well below $2.00/lb.

Whatabout La Verde?
La Verde grades — typicallyranging from 0.3% to 0.5% Cu — aren’t considered high-grade in absolute terms.However, this doesn’t automatically make the project uneconomic. In the contextof large-scale, low-cost porphyry systems — especially in a mining-friendly andinfrastructure-rich region like Chile — these grades can still deliver strongeconomic returns.

Is 0.3–0.5% Cu a problem?

Not necessarily — here’s why:

1. Comparable to Other Major Mines

• Many world-class porphyry copper deposits operate successfully with similar grades:
  
  • Escondida (Chile): ~0.5% Cu average, some zones lower.
  • Spence (Chile): ~0.3–0.4% Cu (heap leach).
  • Los Bronces (Chile): ~0.4–0.6% Cu.
• If the deposit is large, open-pittable, and has low strip ratios, then even 0.3% Cu can be profitable.

2. Favourable Location & Infrastructure

• La Verde is close (30 km) to Costa Fuego’s planned processing hub.
• This proximity can reduce CAPEX and OPEX by:
  
  • Sharing haul roads, power, and water
  • Eliminating need for new standalone facilities
  • Fast-tracking permitting as part of a brownfield expansion

3. Additive Value to Costa Fuego

• Costa Fuego already has a significant resource (~3.2 Mt copper + 2.9 Moz gold eq).
• La Verde may serve as satellite feed, extending mine life or smoothing grade profiles.
• Even modest-grade tonnage can be very valuable when blended with higher-grade ore.

4. Gold and Moly Credits

• Some holes report 0.2–0.3 g/t gold and molybdenum, which add value by reducing net costs on a co-product or by-product basis.

When would these grades be a problem?

They might be uneconomic if:

• The deposit was small in size
• Located in a remote, high-altitude, or high-cost jurisdiction
• Required expensive standalone infrastructure
• Had a very high strip ratio or poor metallurgy

Final Thought on La Verde copper grades

La Verde’s grades are not “high-grade,” but theyare entirely within the economic range for a porphyry system — especially whenadded to an existing project like Costa Fuego. The value lies in scale,simplicity, location, and synergies, not just grade. If copper prices stayabove ~$3.50/lb, La Verde could become a meaningful contributor to CostaFuego’s long-term economics.

Whatabout the Gold at La Verde?

0.1 g/tgold on its own doesn’t sound like much, but when added to a large copper-goldproject that already has a gold component, even low-grade gold cansignificantly improve project economics by:

•Lowering net costs (via by-product credits) • Improving overall metalrecoveries • Blending to optimize processing

Let’s break it down:

1. Gold acts as a by-product credit

In acopper-dominant project like Costa Fuego:

• Gold istypically treated as a by-product, which means its revenue is subtracted fromthe cost of producing copper.

•Example: If you produce $100 worth of copper and $20 worth of gold, your netcopper cost is reduced by $20.

0.1 g/tgold = ~$6.50–$7.00 per tonne at $2,200/oz gold (assuming 75–85% recovery).That’s not insignificant in a large, low-margin operation.

Cumulativeeffect across large tonnage • If you’re mining hundreds of millions of tonnes,even small additions of gold add up fast.

• Forexample, adding 0.1 g/t gold to 100 million tonnes of ore = 320,000 oz of gold($700 million in gross revenue at current prices).

Blendingbenefits

• If theexisting Costa Fuego ore has variable gold grades (say 0.1–0.3 g/t), blendingin consistent 0.1 g/t gold ore from La Verde can stabilize feed grades to themill or leach pads.

• Thishelps with predictable recoveries and efficient metal accounting.

FinalTake:

0.1 g/tgold from La Verde can add meaningful value to Costa Fuego, especially since:

• Theprocessing infrastructure is already gold-capable, • The gold is cumulative andhelps offset copper costs, • The project is scale-driven, where every dollarper tonne matters.